Timothy Dalton played James Bond in only two films: The Living Daylights (1987) and Licence to Kill (1989). Several things stopped a third.
The first was money and timing. Licence to Kill was darker and more violent than earlier Bond films, with a 15-rated tone and a revenge story, and it earned less at the box office than the series was used to. Its US gross was the lowest of the Bond films up to then, so the studio had little reason to rush a follow-up.
The bigger problem was ownership. MGM/UA was in financial trouble, and a legal fight broke out between the Bond production company, Danjaq (Eon's parent), and the studio over the rights and who controlled the franchise. Because of that dispute, the series stopped for about six years. Dalton's contract was tied to a particular schedule, and by the time production could start again he had moved on, so the role went to Pierce Brosnan, who was first cast in GoldenEye (1995).
If you want to dig into the details, the production histories of the two Dalton films and the court dispute are well documented in books on the franchise, such as Lee Pfeiffer and Dave Worrall's The Essential Bond. Dalton has also talked in interviews about his time in the role, and fans still argue about whether his darker take was ahead of its time.
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